What the economy needs from SA’s new government – and why a change of course should be top of the list

What the economy needs from SA’s new government – and why a change, of course, should be top of the list

May 13 2019 17:08 Sibongiseni Mbatha, Fin24

Elections might change a parliament but they don’t dispose of the issues.

After the election and inauguration of the sixth administration, the biggest challenge is to develop better processes than adversarial parliamentary politics and to generate consensus on major issues. So after we have all been absorbed by debates on the electoral arithmetic and its potential implications, there will be plenty of important issues that will be in the minds of businesses and the nation as the dust settles on the May 8 election.

The new administration and parliament should therefore make sure that their warm words are backed up by practical policies. Our country needs an undivided, stable government focusing on stabilising our economy and building on the pillars of long-term growth – education and skills, healthcare, infrastructure and sound governance.

Twenty-five years since apartheid ended, our prospects are much improved. In our sector, black youth no longer face a narrow choice between being a miner and farm labourer. There is a new black middle class, winners from the government’s Black Economic Empowerment programmes.

The Poor vs Post-apartheid Society

But alas, we can only be too aware of the sprawling poverty outside. Many have accused the democratic government of redistributed wealth to rich owners of capital, reproducing inequality and neo-apartheid geographies.

Many poorer people have yet to reap the benefits from our post-apartheid society. Although the government has made investments in housing and other public works, the speed of transformation is very sluggish.

The poor are now held hostage to subtler processes of class exclusion. Opportunities exist mostly for the well-connected, and the interests of the new middle-class are increasingly diverging from those of the rural and urban poor.

There is no shortage of data to highlight the fact that South Africa is still highly unequal. For example, according to a 2011 report from the Commission for Employment Equity, white males hold 73.1% of top management positions while representing 6.7% of the economically active population. As spelt out in the state capture commission, other commissions and inquiries, black professionals are gaining ground within state-owned enterprises, but most of them are blighted by patronage politics.

Lest we forget that public works are bogged down by dubious tendering processes, and ‘irregularities’ are creeping into the provision of social services.

Now What?

So what happens after a new president is sworn in on May 25?

Future growth depends on a better-balanced economy, with workers getting a fairer share in their pay packets, corporations paying their fair share of taxes, and short-term shareholder interests kept in check.

A change of course is urgently needed, based on a sustainable recovery in which everyone has a fair share and a robust plan for investment to boost long-term growth. The government has a fundamental role to play to support a thriving small business sector – by putting small businesses at the heart of policymaking, providing better business support and encouraging a more entrepreneurial culture.

We want to see the next government putting small businesses at the heart of policy-making, and creating a coherent, long-term plan for business support, including export support that matches the ambitions of start-ups and those small firms that want to grow.

Business wants to see swift action on key economic priorities, including staying on top of the public finances. We require skilled as well as educated people. We need affordable and reliable energy and we need connectivity to our markets and to each other by land, sea, air and now more than ever we need broadband.

The next government can re-emphasise a positive message to would-be investors and entrepreneurs that South Africa backs entrepreneurship, jobs, and wealth creation for the benefit of all.

The goal should be to create an environment in which the country regularly encourages and supports start-ups to become world-class firms.

Politicians, Promises and Delivery

Politicians need to give as much attention to the delivery of policies as they do to the ideas themselves – business and the public will judge success on promises being kept.

The 6th administration’s challenge is to build on the successes of the previous administrations to reduce inequality further, create much needed jobs and ensure stronger, sustainable and more inclusive growth for all.

Addressing widespread poverty is the single most important policy challenge facing South Africa. Not only is poverty high when benchmarked against other emerging economies of the world, but also the rate of poverty reduction has been slow.

Inequality is increasing almost everywhere across our country. The inequality that exists today, therefore, derives less from the unequal availability of opportunity than it does from the unequal ability to exploit opportunity. And that unequal ability, in turn, stems from differences in the inherent human potential that individuals begin with and in the ways that families and communities enable and encourage that human potential to flourish.

Rising inequality, meanwhile, has been compounded by rising insecurity and anxiety from people higher up on the economic ladder. The critical challenge is to spread the payback of economic growth among the people, especially the poorest of the poor.

Transformation and Creating an Economic Ecosystem

The National Development Plan espouses transformation as a means of dealing with a flagging economy and the perennial question of unemployment. However, while South Africa has embraced rhetoric extolling the benefits of transformation, entrenched political, economic and socio-cultural interests limit these efforts.

For example, in my financial services sector, the country has yet to create the economic ecosystem necessary for the transformation of the sector to thrive – that is, an integrated policy environment that encourages transformative ventures to take hold and succeed. Instead, many challenges continue to impede the transformation of this sector from reaching its full potential.

Transformation is more than just an economic term – it is a way of thinking. Creating jobs, empowering people, and giving individuals access to better lives for themselves and their children is certainly a development goal which we all aspire to.

In the new administration, the challenges that hinder transformation – such as competition from larger firms, regulatory and socio-cultural constraints, and limited access to capital – have to be addressed expeditiously by the public and private sectors with the assistance of civil society.

We at the Association of Black Securities and Investment Professionals, hope the new administration will stick with what’s working so that positive progress can be built upon and avoid adversarial politics which throw obstacles in the path of development.

Where tough decisions are needed, parliamentarians and ministries should focus on tackling only the most important challenges and not overstretch themselves on the small stuff.

Sibongiseni Mbatha is President of the Association of Black Securities and Investment Professionals. Views expressed are his own.

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